Worried About Retirement? You Need A Plan In Motion

By 2030, all baby boomers will be older than age 65, meaning 1 in 5 U.S. residents will be of retirement age.1 John Vespa, a demographer with the U.S. Census Bureau, says that by 2035, older people will outnumber those under age 18 for the first time (see chart).2

Bottom line, we’re living longer, which is good news. But, it means your money must last longer, too.

If that last statement worries you, a financial advisor can help reduce some of your anxiety. A true financial planner looks at more than your investments and tries to grow your wealth. You need more than a planner telling you to put your money in a diversified portfolio and “let it ride.”

You worked all your life. Now you must make decisions impacting hundreds of thousands of dollars of your future income. Many retirees make poor choices with their investments because they don’t know all the facts.

There are hundreds of ways to optimize Social Security income and pensions. A financial planner has the tools to help you with this.

You can also use insurance products with risk control and income guarantees. Losses hurt – especially when you’re retired and withdrawing income.

Each retiree’s needs are diﬀerent. Some simply want income for themselves, while others want a plan to leave a legacy. But losses will hurt everyone’s plans. Creating reliable income and reducing risk are essential.

2. Lazy Money Reduction

It’s important that the majority of your retirement savings is making money. Many people have thousands of dollars in low-yielding alternatives. It’s OK to keep a certain amount of your portfolio liquid for unforeseen expenses. But many savers are so afraid of loss that they’re earning too little on a major part of their savings.

Banks have trillions of dollars earning lazy-money returns. They’re more than happy to give you almost nothing for your savings. There are alternatives to bank CDs, money markets, and bonds. A good financial planner will help you with those options.

3. Tax Cuts

Fewer taxes means more in your pocket — and your heirs’ pockets. The higher your tax bracket, the more important tax planning is for you.

If you’re self-employed with no employees, research a solo 401(k). If you have a small company with only a few employees, a deﬁned beneﬁt plan may be the answer for you. If you work for a ﬁrm, always put away at least as much as the company matches. Many people can put extra money into IRAs even with a work plan. These strategies will help you take advantage of tax deductions now.

You also can make use of Roth IRAs each year. Consider converting part of your qualified money to a Roth IRA. You will pay taxes on the converted portion.

4. Chronic Long-Term Care (LTC) Protection

As people live longer, more will end up too sick to care for themselves. Most people know someone who lost their entire retirement savings to long-term illness care.

Approximately 7.2 million Americans had LTC insurance in 2014.3 Those close to the poverty level will most likely have state care. The wealthy should be able to aﬀord their own care. For the majority in the middle, we need a plan.

There are choices beyond traditional LTC insurance. Look into products like asset-based LTC and new life insurance products with chronic illness riders. Some of these riders are included at no cost, and the qualifications typically aren’t as stringent as traditional LTC.

5. A Living Trust/Legacy Plan

Not everyone needs a living trust, but I recommend having at least a notarized will and a medical directive. There are many good reasons to have a living trust, and costs vary, so make sure to compare prices.

A living trust helps ensure that everything you worked for goes to the beneficiaries you intended. A living trust will also keep state-appointed administrators from getting involved. If you own a home or other assets, multiple real estate properties, or a business, you may benefit from a living trust. Likewise, if you’ve been married more than once or have children with disabilities, a living trust will benefit you.

But a living trust is just the start. After that, you will need to fund it. Our philosophy is that most people need life insurance to fund their legacy. We use life insurance as an asset as well as asset protection.

Some of the new plans, when funded well, can handle several needs. Some types of insurance can lower the costs of creating your legacy.

If you are still healthy and have old policies, review them. You may be able to increase your benefits or decrease your costs. The sooner you start and the healthier you are, the lower the costs and the better your options.

To begin eliminating worry in retirement, you need more than an account with a large firm. You need a personalized plan and a professional financial planner who can handle all your needs.